Kazakhstan and Azerbaijan are best prepared for economic shocks: Kelimbetov
May 29. Tengrinews
Reporting by Dmitriy Khegai, writing by Assel Satubaldina, editing by Tatyana Kuzmina
Kazakhstan and Azerbaijan are best prepared for global economic shocks among all post-Soviet countries, Tengrinews reports citing Kairat Kelimbetov, the Central Bank Governor as saying at a press conference in Almaty on May 19.
Economic shocks are expected amidst the fall in oil prices, which severely affected the economies of major oil-exporting countries. Among other reasons of economic declines are unfavourable economic situation in Russia.
According to Mr. Kelimbetov, the country were carrying out effective reforms, which helped it address the global challenges. “There are two post-Soviet countries, apart from Russia, who are best prepared for such kind of economic shocks thanks to the policies they had been pursuing in the previous years, which included creation of oil funds and reserve funds of the Government. Those arrangements were like airbags to absorb the shocks. For example, the gold and fedex reserves of the National Bank and National Fund (of Kazakhstan) in the time of the 2008-2010 crisis were estimated at 50 billion dollars, whereas at the end of last year and in the beginning of this year, they amounted to almost 100 billion dollars,” the Central Bank Governor said.
The National Fund of Kazakhstan was created in 2000 as a stabilization fund that accumulates windfall revenues from oil sales and ensures the economy of Kazakhstan is stable against oil prices swings. The assets of the National Fund are monitored by the National Bank of Kazakhstan.
He added that experts had calculated what the price of a barrel of Kazakhstan’s oil had to cost for the country to maintain a positive balance of the National Fund. “We have calculated that with the oil price standing at 55 dollars per barrel we are not tapping into the National Oil Fund. The inflows into the National Oil Fund are positive with the oil price higher than 55 dollars per barrel. (…) In the medium term, we will still have over 300 million additional barrels no later than in 2017, which will be produced in the first phase of Kashagan, and in 2020 the Tengiz field expansion project will be launched,” Mr. Kelimbetov said.
The Kashagan field is located in the Kazakhstan sector of the Caspian Sea and extends over a surface area of approximately 75 kilometers by 45 kilometers.
The oilfield’s reserves are estimated at 38 billion barrels, with 10 billion barrels being recoverable. Besides, natural gas reserves are estimated at over 1 trillion cubic meters.
The Kashagan field is considered the world’s largest discovery of the last 30 years, combined with the Tengiz field, which is the world’s deepest operating super-giant oil field, with the top of the reservoir at about 12,000 feet deep (3,657 m) including the super giant Tengiz field, the smaller but sizable Korolev field and several exploratory prospects.
The Tengiz and Korolev fields have the potential for an estimated 750 million to 1.1 billion metric tonnes (6 billion to 9 billion barrels) of recoverable oil.
Head of the country’s main financial regulator Kelimbetov said that economic shocks would not have a big impact on Kazakhstan. On the contrary, Kazakhstan expects a decrease in the inflation rate from 17 percent to 11 percent by the year’s end.
In addition, according to experts, in the third and fourth quarter of 2015, Russian economy would begin to recover, which would also be a positive factor for the entire post-Soviet space.